The federal government has approved the monthly withdrawal of RM500 from first accounts (dubbed Account I) of the Employees Provident Fund (EPF) Board for 12 months.
According to the Finance Minister, Tengku Dato’ Seri Zafrul Tengku Abdul Aziz, eligible members may apply starting January 2021, with withdrawal of up to RM6,000.
Taking into account both the i-Lestari initiative and convenience of withdrawing from Account I, the total amount of cash withdrawal will be up to RM12,000.
“Withdrawing from EPF Account I will lessen financial burdens of some 600,000 affected members, apart from aiding those who lost their jobs.
“Overall, some RM4 billion will be involved for Account 1 withdrawal,” he said while tabling the 2021 Budget at the Dewan Rakyat today (November 6).
Tengku Zafrul added that minimum wage contribution will be reduced from 11 percent to nine percent starting January 2021.
“This is to increase usable income and benefit EPF contributors with initiative value up to RM9.3 million,” he stated.
The government will also allow withdrawal from second accounts (Account II) to purchase insurance protection products.
Tengku Zafrul clarified that the decision followed a low insurance reimbursement rate in the country, apart from factors that endanger individual and household financial security.
To encourage retirement savings, withheld individual payroll taxes up to RM3,000 for the Private Retirement Schemes (PRS) will be extended until assessment year 2025.